Understanding the True Cost of UK’s Electricity Bills

“The UK has the highest electricity process in the world!” is often claimed by people naysaying the transition to renewables, usually with the claim that it is the cost of those renewables that are responsible for our high energy bills. Let’s dive into the reality.

Once you strip out policy costs, levies, standing charges, network charges, VAT, and retail margins, and look only at the underlying wholesale electricity price, the UK is not one of the most expensive countries. It actually sits mid‑pack internationally and middle‑to‑upper within Europe.

The retail bill is high; the wholesale energy itself is not unusually expensive and renewables are the lowest cost per MWh of any of our generation.

What wholesale electricity actually costs in the UK

UK wholesale electricity prices are published in Quarterly Energy Prices (DESNZ).

Recent data shows UK wholesale prices in 2025–26 typically in the £70–£90/MWh range, after the gas‑price spike subsided.

These are not world‑leading prices. They are broadly similar to other gas‑linked European markets.

UK wholesale prices are broadly similar to other gas‑linked European markets.

How the UK compares internationally (wholesale cost)

Europe

The House of Lords Library briefing confirms that the UK’s high retail prices come from gas exposure, taxes, levies, and standing charges, not from unusually high wholesale electricity. Wholesale prices in Europe are broadly similar across gas‑dependent markets.

Selectra’s 2026 comparison also shows that the UK sits near the upper end of household prices, but this is because of non‑wholesale costs. The underlying electricity itself is not dramatically more expensive than France, Spain, Italy, Ireland, Belgium, or the Netherlands.

Amongst the many European countries that are consistently at or above UK household prices, according to in Eurostat‑based comparisons, are:

Germany – very high taxes and levies.
Denmark – historically among the highest due to taxation.
Belgium – high network and policy costs.
Ireland – heavy reliance on gas and limited interconnection.
Italy – high system charges and imported energy costs.

Switchcraft’s 2024–2026 comparison goes into it in more detail and confirms that UK energy prices are high, but several European peers remain higher.

Countries with higher wholesale electricity

Countries with structurally higher wholesale prices tend to be those with:

Isolated grids (e.g., island nations)
High reliance on oil‑fired generation
Weak interconnection
Limited domestic energy resources

Worldwide examples include:

Hawaii (USA) – oil‑based generation
Caribbean nations – oil‑based generation
Australia (certain states) – high marginal gas pricing and limited interconnection

These markets routinely exceed UK wholesale levels.

Countries with lower wholesale electricity

Countries with large amounts of cheap hydro, nuclear, or strong interconnection often have lower wholesale prices:

Norway – hydro
Sweden – hydro + nuclear
France – nuclear (though prices vary with reactor availability)
Canada (Quebec) – hydro

These markets generally are below UK wholesale levels.

Why the UK’s wholesale price is not unusually high

Across all authoritative sources:

The UK’s wholesale electricity price is set by gas (marginal pricing).
Gas‑linked markets across Europe have similar wholesale levels.
The UK’s retail bills are high because of standing charges, levies, VAT, network costs, and policy costs, not because wholesale electricity is uniquely expensive. Ofgem handily provides the breakdown in a pie chart, below. They also state that UK household electricity prices are 44% above the EU median, meaning many EU countries are lower, while several are higher.

This is explicitly stated in both the House of Lords briefing and Selectra’s 2026 analysis.

Bottom line

If you compare just the wholesale electricity mix:

The UK is not among the most expensive countries. It is middle‑to‑upper within Europe, mainly because Europe as a whole is gas‑linked.
Many other countries have higher wholesale prices (island/oil‑based grids).
Many have lower wholesale prices (hydro/nuclear‑heavy grids).
The UK’s reputation for “world‑leading electricity prices” comes from retail bills, not wholesale energy.
Even when you simply consider household energy bills the UK is not the highest in Europe